The Impossible Dream - Cutting Federal Deficits & Taxes

Show us exactly what you would do to reduce the deficit while the number one priority right now is getting people back to work. Show us what you would cut while still creating jobs and understanding how the cuts effect people and programs.

The Impossible Dream - Cutting Federal Deficits & Taxes

[quote]You can’t have a coherent conversation about deficit reduction if tax increases are off the table and the country is still at war. This is fantasyland economics, the equivalent of believing that John Boehner can fly.

People traveling in the real world understand that the federal budget deficits are sky high because of the Bush-era tax cuts, the costs of the wars in Iraq and Afghanistan, and the spending that was needed to keep the Great Recession from spiraling into another Great Depression.

Even if deficit reduction right now were a good idea — which it is not, given the sorry state of the economy and the vast legions of the unemployed — the deficit zealots have no viable plan for getting their misguided mission accomplished.

What’s needed now is the same thing that has been needed for the past two years and more, a bold plan to put millions of Americans back to work and paying taxes, and a careful, thoughtful, strategic but unequivocal withdrawal of U.S. troops from Afghanistan and Iraq.[/quote]

Please note the "MANDATORY" outlays required by law in the chart at the bottom of the original post. And it is important to recognize that the government actually owes money into the social security fund because they have been taking out (so called excess money) out of it for years in order to make the budgets not look as bad. They are required to also eventually make up for that. And with baby boomers going into retirement age, the demand for more funds for social security will go up as well.

You also cannot cut interest expense unless you are paying off the debt or refinancing to a lower rate.

So, the only two areas that are really open for cuts are discretionary and defense. Medicare and Medicaid, I'm not sure what the laws require in this. Cutting health costs is a necessity as well which is what the Obamacare is designed to help do....as a first step.

metta8 saidPlease note the "MANDATORY" outlays required by law in the chart at the bottom of the original post. And it is important to recognize that the government actually owes money into the social security fund because they have been taking out (so called excess money) out of it for years in order to make the budgets not look as bad. They are required to also eventually make up for that.

In other words, Social Security has been robbed, it is bankrupt, the "trust fund" is full of I.O.U.s that the Federal government will have to pay pretty soon in order for the whole Ponzi scheme that is Social Security to keep going.

Yes, by George W. Bush, but that doesn't mean the government doesn't have to fulfill it's obligations to the citizenry. And SS isn't a "ponzi scheme" so long as the funds aren't raided.

- One thing that we will have to do is increase the age of retirement to something older than 65. They are already pushing this in many parts of Europe.With people living longer and an aging population, it is just not feasible to have such a large percentage of your population being retired for around 30 years.

-Another thing they need to do is make sure that large profitable corporations don't have enough loop holes designed in the system so they never need to pay taxes. Many large corporation in the US never have to pay federal taxes because there are so many loopholes for them.

The plan would reduce Social Security benefits to most future retirees — low-income people would get a higher benefit — and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years.[/quote]

[quote]The proposed simplification of the tax code would repeal or modify a number of popular tax breaks — including the deductibility of mortgage interest payments — so that income tax rates could be reduced across the board. Under the plan, individual income tax rates would decline to as low as 8 percent on the lowest income bracket (now 10 percent) and to 23 percent on the highest bracket (now 35 percent). The corporate tax rate, now 35 percent, would also be reduced, to as low as 26 percent.

Even after reducing the rates, the overhaul of the tax code would still yield additional revenue to reduce annual deficits — a projected $80 billion in 2015.[/quote]

[quote]proposing reducing annual cost-of-living increases for Social Security, gradually raising the retirement age to 69 and taking aim at popular tax breaks such as the mortgage interest deduction.[/quote]

Index the retirement age to longevity -- i.e., increase the retirement age to qualify for Social Security -- to age 69 by 2075.Index Social Security yearly increases to inflation rather than wages, which will generally mean lower cost of living increases and less money per average recipient."Increase progressivity of benefit formula" -- i.e., means test part of Social Security benefits by 2050.Increase the Social Security contribution ceiling: while people only pay Social Security taxes on the first $106,800 of their wages today, that's only about 86% of the total potentially taxable wages. The co-chairs suggest raising the ceiling to capture 90% of wages.

Tax reform:The co-chairs suggest capping both government expenditures and revenue at 21% of GDP eventually.In their first plan, called "The Zero Plan," they suggest reducing the tax brackets to three personal brackets and one corporate rate while eliminated all credits and deductions. Without any credits or deductions (including the EITC and mortgage interest deductions), the 3 tax rates would be 8, 14 and 23 percent.In their second plan, they would increase the personal deduction to $15,000, create 3 tax brackets (15, 25 and 35%); repeal or significantly curtail a number of popular tax deductions (including the state and local deduction and the mortgage interest deduction); and eliminate other tax expenditures.The third plan would force Congress to undertake comprehensive tax reform by 2012 by raising taxes for each year Congress fails to act.All their proposals limit Congress to collecting taxes on income made within the United States, reducing or eliminating taxes on American expats and revenues companies earn abroad.They also suggest raising the federal gas tax by 15 cents per gallon.Medicaid/Medicare cutsForce more low-income individuals into Medicaid managed care.Increase Medicaid co-pays.Accelerate already-planned cuts to Medicare Advantage and home health care programs.Create a cap for Medicaid/Medicare growth that would force Congress and the President to increase premiums or co-pays or raise the Medicare eligibility age (among other options) if the system encounters cost overruns over the course of 5 years.

Discretionary spending cutsEliminate all earmarks.Eliminate the Office of Safe and Drug-Free Schools.Freeze federal worker wage increases through 2014; eliminate 200,000 federal jobs by 2020; and eliminate 250,000 federal non-defense contractor jobs by 2015.Eliminate subsidized student loans, in which the government makes interest payments while the student is in school.Establish co-pays in the VA medical system and change the co-pays and deductibles for military retirees that remain in that system.Eliminate NASA funding for commercial space flight.Require the Smithsonian museums to start charging entrance fees and raise fees at the national parks.Eliminate funding to the Corporation for Public Broadcasting -- which many conservatives suggested in the wake of the firing of former NPR contributor Juan Williams.Reduce farm subsidies by $3 billion per year.Create a Committee to eliminate unnecessary programs to the tune of $11 billion by 2015.Merge the Department of Commerce and the Small Business Administration and cut its budget by 10 percent.End "low-priority" Army Corps of Engineers programs to the tune of $1 billion by 2015.Cut the State Department's overseas budget by 10 percent by 2015; reduce the proposed foreign aid budget by 10 percent in 2015; and cut voluntary contributions to the United Nations by 10 percent in 2015. Eliminate the Overseas Private Investment Corporation, which provides subsidized financing and political risk insurance for U.S. companies' investments abroad.Cut $900 million in fossil fuel research funds.Force airlines to increase their contributions to airline security costs and allow them to increase per-ticket security fees.Defense spending cuts:Double the number of defense contractor positions scheduled for elimination from 10 percent of current staff augmentees to 20 percent.Reduce procurement by 15 percent, or $20 billion.Eliminate the V-22 Osprey program.Cancel the Marine Corps' Expeditionary Fighting Vehicle program.Halve the number of F-35 Joint Strike Fighters in favor of F-16s and F/A-18Es.Cancel the Marine Corps F-35 program.Cancel the Navy's Future Maritime Prepositioning Force.Cancel the new Joint Light Tactical Vehicle (JLTV), the Ground Combat Vehicle, and the Joint Tactical Radio.Reduce military forces in Europe and Asia by one-third.Send all military children based in the U.S. to local schools.The report also recommends tort reform as a way to reduce Medicare and Medicaid expenditure

The proposals are excellent and, more importantly, realistic. I very much hope they are acted on.

I think the quality of the proposals---a far cry from the nonsense spouted in the recent election---very strongly speaks in favor of bipartisan commissions as a tool to make politically difficult decisions.

It would be nice if the two parties could get together and make the compromises necessary to achieve debt reduction.With the new Repub House majority so full of itself and unwilling to compromise, it doesn't seem likely.

TigerTim saidThe proposals are excellent and, more importantly, realistic. I very much hope they are acted on.

I think the quality of the proposals---a far cry from the nonsense spouted in the recent election---very strongly speaks in favor of bipartisan commissions as a tool to make politically difficult decisions.

The proposals are unpalatable---the alternatives are likely worse.

The one issue that most are upset about is cutting taxes. That is completely irresponsible. Dropping the highest marginal rate by 10 points while we have this enormous deficit is part of what created it. Who does that help? The tax cuts have led to no job growth and no growth in GDP. So the rationale behind them - or at least what has been used to sell them and argue that they're now sacrosanct - is ridiculous. And to cut Medicare and SS while giving those tax breaks is unconscionable. The other aspects of it I could live with.

Eliminating the mortgage interest deduction would hit me hard. If they eliminated writing off the property taxes, I would be upset. I would hate to have to pay taxes on taxes. Thankfully, I don't see such a request.

It is too bad that there would still be a $300 billion deficit with all of those cuts and the politicians are already saying that the recommendations go too far.

conservativejock saidAsk the Swiss. Lol. It begins with constitutional limits on taxation and spending. Furthermore, the Swiss tax system is one that must be renewed by the electorate.....yes, it has an expiration.

conservativejock saidAsk the Swiss. Lol. It begins with constitutional limits on taxation and spending. Furthermore, the Swiss tax system is one that must be renewed by the electorate.....yes, it has an expiration.

Soon time for breakfast. I'm jet lagged.

Have a good day.

So in other words---no you don't have a concrete plan, just waffle.

Seems like a useful starting point. With discretionary spending having grown substantially faster than GDP, drawing a line in the sand seems like a reasonable idea.

This doesn't mean that this is the end all of what must be done either - and it's simply uncharitable demagoguery to claim that it is. There are plenty of proposals from Paul Ryan's roadmap to other suggestions from Heritage.

The most crucial task now is to bring down the size of government to a point that the economy grows faster than deficits - which means that the debt burden falls by default. Personally, I think that removing the mortgage deduction is long overdue - it's one of the causes and interventions that cause housing bubbles causing a savings bias towards residential real estate.

Are they complete? No. Just starting points. The bigger conversation that must also happen is what Americans believe government is and should be. I can however understand your frustration with recognizing the reality that a majority of Americans do not want higher taxes and want less government. To dismiss these measures as incomplete seems more of an attempt to push your belief that Americans should be taxed more.

conservativejock saidAsk the Swiss. Lol. It begins with constitutional limits on taxation and spending. Furthermore, the Swiss tax system is one that must be renewed by the electorate.....yes, it has an expiration.

Soon time for breakfast. I'm jet lagged.

Have a good day.

So in other words---no you don't have a concrete plan, just waffle.

Seems like a useful starting point. With discretionary spending having grown substantially faster than GDP, drawing a line in the sand seems like a reasonable idea.

This doesn't mean that this is the end all of what must be done either - and it's simply uncharitable demagoguery to claim that it is. There are plenty of proposals from Paul Ryan's roadmap to other suggestions from Heritage.

The most crucial task now is to bring down the size of government to a point that the economy grows faster than deficits - which means that the debt burden falls by default. Personally, I think that removing the mortgage deduction is long overdue - it's one of the causes and interventions that cause housing bubbles causing a savings bias towards residential real estate.

Are they complete? No. Just starting points. The bigger conversation that must also happen is what Americans believe government is and should be. I can however understand your frustration with recognizing the reality that a majority of Americans do not want higher taxes and want less government. To dismiss these measures as incomplete seems more of an attempt to push your belief that Americans should be taxed more.

Actually, the proposal from the "debt commission" is an opening salvo to position the public to accept less radical measures, all of which will do as this does and reward the wealthy and corporations while punishing or, perhaps, finally eliminating, the middle class. Since the American economy is 70% consumerism and there is not other plan for re-purposing our economy, these proposals would just hasten our move toward a banana republic.

Given that there is not a single post-industrial nation that has benefited from such austerity measures, and many that actually moved toward socialism after that failure, perhaps this will work out for the best in the long term.

Christian73 saidActually, the proposal from the "debt commission" is an opening salvo to position the public to accept less radical measures, all of which will do as this does and reward the wealthy and corporations while punishing or, perhaps, finally eliminating, the middle class. Since the American economy is 70% consumerism and there is not other plan for re-purposing our economy, these proposals would just hasten our move toward a banana republic.

Given that there is not a single post-industrial nation that has benefited from such austerity measures, and many that actually moved toward socialism after that failure, perhaps this will work out for the best in the long term.

I'm curious which post industrial nations are you referring to? How do you see these as austerity measures? How is scaling back government to a size it was within the last 10 years anywhere close to being "austerity"?

The American economy may in fact be 70% consumerism, but I would have thought you of all people would find that offensive and surely not to be subsidized. The irony is that you don't see that there's a difference between the wealthy and those who make high incomes. Sure you can try to tax the most productive in society higher, and you may even think that this will reduce inequality, but the reality is that this makes everyone worse off - and that's been repeatedly the case throughout history (it's a simple equation: greater economic liberty = greater economic growth).

Christian73 saidActually, the proposal from the "debt commission" is an opening salvo to position the public to accept less radical measures, all of which will do as this does and reward the wealthy and corporations while punishing or, perhaps, finally eliminating, the middle class. Since the American economy is 70% consumerism and there is not other plan for re-purposing our economy, these proposals would just hasten our move toward a banana republic.

Given that there is not a single post-industrial nation that has benefited from such austerity measures, and many that actually moved toward socialism after that failure, perhaps this will work out for the best in the long term.

I'm curious which post industrial nations are you referring to? How do you see these as austerity measures? How is scaling back government to a size it was within the last 10 years anywhere close to being "austerity"?

The American economy may in fact be 70% consumerism, but I would have thought you of all people would find that offensive and surely not to be subsidized. The irony is that you don't see that there's a difference between the wealthy and those who make high incomes. Sure you can try to tax the most productive in society higher, and you may even think that this will reduce inequality, but the reality is that this makes everyone worse off - and that's been repeatedly the case throughout history (it's a simple equation: greater economic liberty = greater economic growth).

The proposals from the "debt commission" are austerity measures. What else can you call them? Actually, it's closer to Naomi Klein's "Shock Doctrine" than anything else. Anti-government forces (Bush) run up huge deficits while handing out money to their friends (crony capitalism) and then want to slash the goods and services that citizens have paid taxes for because said crony capitalism is bad for the economy.

If either co-chair of had an ounce of patriotism or empathy, they would be calling on American-based multinationals, high income earners and the idle rich to contribute toward the reducing of our debt and minimizing the deficit so that all those people who worked so hard to make the country's wealth possible would not be punished for the bad behavior of Wall Street, insurance companies and the previous administrations.

And earning a high income does not equal "most productive." Is Lloyd Blankfein, whose company was bailed out in excess of $20 billion after its financial shenanigans nearly destroyed it, more productive than the guy who delivers your pizza? If so, how?

Is a brain surgeon more productive than a general practitioner? Absolutely not. But brain surgeons earn 2 to 3 times more than GPs. In fact, depending on how you articulate "productivity", the GP who probably sees 20 patients per day versus the brain surgeons 3-5 is, in some ways, more productive.

The problem with your belief in "markets uber alles is that there is no impartial arbiter of this market, only various parties trying to bend regulation (or lack there of) to their interests. If the government was serious about fixing the deficit and debt, here are some proposals that would do both while encouraging responsible economic growth.

Mike LuxYou could write a deficit-reduction plan, as well as a plan to shore up Social Security (the two are very different things) that would garner pretty broad support from the American people. On Social Security, a very minor adjustment -- raising the cap on payroll taxes -- would keep Social Security solvent through the end of this century. On the deficit itself, there are a whole set of options to dramatically reduce the deficit that garner clear majority support in the public polling on economic issues, including:

1. Increasing taxes on millionaires and billionaires. 2. Imposing a financial transactions tax on Wall Street speculation. 3. Ending a wide array of corporate tax loopholes for things like overseas investment. 4. Ending corporate agribusiness subsidies larded into the farm bill. 5. Ending loopholes and subsidies of various kinds to the big energy companies. 6. Reforming the government contracting process to end no-bid contracting, impose penalties on cost overruns, and cut down on excessive bonuses. 7. Allowing Medicare to negotiate drug prices with the big pharmaceutical companies. 8. Having a vigorous public option to provide competition for health insurers.

Christian73 saidActually, the proposal from the "debt commission" is an opening salvo to position the public to accept less radical measures, all of which will do as this does and reward the wealthy and corporations while punishing or, perhaps, finally eliminating, the middle class. Since the American economy is 70% consumerism and there is not other plan for re-purposing our economy, these proposals would just hasten our move toward a banana republic.

Given that there is not a single post-industrial nation that has benefited from such austerity measures, and many that actually moved toward socialism after that failure, perhaps this will work out for the best in the long term.

I'm curious which post industrial nations are you referring to? How do you see these as austerity measures? How is scaling back government to a size it was within the last 10 years anywhere close to being "austerity"?

The American economy may in fact be 70% consumerism, but I would have thought you of all people would find that offensive and surely not to be subsidized. The irony is that you don't see that there's a difference between the wealthy and those who make high incomes. Sure you can try to tax the most productive in society higher, and you may even think that this will reduce inequality, but the reality is that this makes everyone worse off - and that's been repeatedly the case throughout history (it's a simple equation: greater economic liberty = greater economic growth).

The proposals from the "debt commission" are austerity measures. What else can you call them? Actually, it's closer to Naomi Klein's "Shock Doctrine" than anything else. Anti-government forces (Bush) run up huge deficits while handing out money to their friends (crony capitalism) and then want to slash the goods and services that citizens have paid taxes for because said crony capitalism is bad for the economy.

If either co-chair of had an ounce of patriotism or empathy, they would be calling on American-based multinationals, high income earners and the idle rich to contribute toward the reducing of our debt and minimizing the deficit so that all those people who worked so hard to make the country's wealth possible would not be punished for the bad behavior of Wall Street, insurance companies and the previous administrations.

And earning a high income does not equal "most productive." Is Lloyd Blankfein, whose company was bailed out in excess of $20 billion after its financial shenanigans nearly destroyed it, more productive than the guy who delivers your pizza? If so, how?

Is a brain surgeon more productive than a general practitioner? Absolutely not. But brain surgeons earn 2 to 3 times more than GPs. In fact, depending on how you articulate "productivity", the GP who probably sees 20 patients per day versus the brain surgeons 3-5 is, in some ways, more productive.

The problem with your belief in "markets uber alles is that there is no impartial arbiter of this market, only various parties trying to bend regulation (or lack there of) to their interests. If the government was serious about fixing the deficit and debt, here are some proposals that would do both while encouraging responsible economic growth.

Mike LuxYou could write a deficit-reduction plan, as well as a plan to shore up Social Security (the two are very different things) that would garner pretty broad support from the American people. On Social Security, a very minor adjustment -- raising the cap on payroll taxes -- would keep Social Security solvent through the end of this century. On the deficit itself, there are a whole set of options to dramatically reduce the deficit that garner clear majority support in the public polling on economic issues, including:

1. Increasing taxes on millionaires and billionaires. 2. Imposing a financial transactions tax on Wall Street speculation. 3. Ending a wide array of corporate tax loopholes for things like overseas investment. 4. Ending corporate agribusiness subsidies larded into the farm bill. 5. Ending loopholes and subsidies of various kinds to the big energy companies. 6. Reforming the government contracting process to end no-bid contracting, impose penalties on cost overruns, and cut down on excessive bonuses. 7. Allowing Medicare to negotiate drug prices with the big pharmaceutical companies. 8. Having a vigorous public option to provide competition for health insurers.

I'm sorry, I skimmed your explanation for some examples of post industrial countries that attempted austerity measures with the consequences you describe and didn't see them.

Christian73 saidActually, the proposal from the "debt commission" is an opening salvo to position the public to accept less radical measures, all of which will do as this does and reward the wealthy and corporations while punishing or, perhaps, finally eliminating, the middle class. Since the American economy is 70% consumerism and there is not other plan for re-purposing our economy, these proposals would just hasten our move toward a banana republic.

Given that there is not a single post-industrial nation that has benefited from such austerity measures, and many that actually moved toward socialism after that failure, perhaps this will work out for the best in the long term.

I'm curious which post industrial nations are you referring to? How do you see these as austerity measures? How is scaling back government to a size it was within the last 10 years anywhere close to being "austerity"?

The American economy may in fact be 70% consumerism, but I would have thought you of all people would find that offensive and surely not to be subsidized. The irony is that you don't see that there's a difference between the wealthy and those who make high incomes. Sure you can try to tax the most productive in society higher, and you may even think that this will reduce inequality, but the reality is that this makes everyone worse off - and that's been repeatedly the case throughout history (it's a simple equation: greater economic liberty = greater economic growth).

The proposals from the "debt commission" are austerity measures. What else can you call them? Actually, it's closer to Naomi Klein's "Shock Doctrine" than anything else. Anti-government forces (Bush) run up huge deficits while handing out money to their friends (crony capitalism) and then want to slash the goods and services that citizens have paid taxes for because said crony capitalism is bad for the economy.

If either co-chair of had an ounce of patriotism or empathy, they would be calling on American-based multinationals, high income earners and the idle rich to contribute toward the reducing of our debt and minimizing the deficit so that all those people who worked so hard to make the country's wealth possible would not be punished for the bad behavior of Wall Street, insurance companies and the previous administrations.

And earning a high income does not equal "most productive." Is Lloyd Blankfein, whose company was bailed out in excess of $20 billion after its financial shenanigans nearly destroyed it, more productive than the guy who delivers your pizza? If so, how?

Is a brain surgeon more productive than a general practitioner? Absolutely not. But brain surgeons earn 2 to 3 times more than GPs. In fact, depending on how you articulate "productivity", the GP who probably sees 20 patients per day versus the brain surgeons 3-5 is, in some ways, more productive.

The problem with your belief in "markets uber alles is that there is no impartial arbiter of this market, only various parties trying to bend regulation (or lack there of) to their interests. If the government was serious about fixing the deficit and debt, here are some proposals that would do both while encouraging responsible economic growth.

Mike LuxYou could write a deficit-reduction plan, as well as a plan to shore up Social Security (the two are very different things) that would garner pretty broad support from the American people. On Social Security, a very minor adjustment -- raising the cap on payroll taxes -- would keep Social Security solvent through the end of this century. On the deficit itself, there are a whole set of options to dramatically reduce the deficit that garner clear majority support in the public polling on economic issues, including:

1. Increasing taxes on millionaires and billionaires. 2. Imposing a financial transactions tax on Wall Street speculation. 3. Ending a wide array of corporate tax loopholes for things like overseas investment. 4. Ending corporate agribusiness subsidies larded into the farm bill. 5. Ending loopholes and subsidies of various kinds to the big energy companies. 6. Reforming the government contracting process to end no-bid contracting, impose penalties on cost overruns, and cut down on excessive bonuses. 7. Allowing Medicare to negotiate drug prices with the big pharmaceutical companies. 8. Having a vigorous public option to provide competition for health insurers.

I'm sorry, I skimmed your explanation for some examples of post industrial countries that attempted austerity measures with the consequences you describe and didn't see them.

What were they?

Ireland, Poland, Russia, South Africa, several South American countries and any place the IMF has left its stain.